What is difference between insolvency and bankruptcy?

[Good-Person]

Many people may have had heard about term "bankruptcy", which may refer to a condition when a company no longer has assets in order to clear the dues or debt. So, what about insolvency? I have studied that insolvency refers to a condition where a company may be going through financial problems. So, is insolvency a kind of temporary financial condition?

 

[Kane]

When a company goes bankrupt, it indicates that it has collapsed and the company will start liquidating rs assets and paying the creditors. Insolvency is a condition for a business when it no longer can pay bills, including staff salary, this is a condition that comes before bankruptcy.

 

[Hasan Raza]

In simple words we can say that insolvency is when we can't pay our debts on time. While on the other hand bankruptcy is a legal process of debts payments not made on requirements

 

[Debashis]

Insolvency refers to a financial state in which an individual or organization is unable to meet their financial obligations. Bankruptcy, on the other hand, is a legal process that occurs when an individual or organization declares their inability to repay their debts and seeks protection from their creditors. While insolvency is a financial condition, bankruptcy is a legal proceeding that aims to resolve the insolvency issue and provide a fresh financial start to the debtor.

 

[saoussen57651]

Many people may have had heard about term "bankruptcy", which may refer to a condition when a company no longer has assets in order to clear the dues or debt. So, what about insolvency? I have studied that insolvency refers to a condition where a company may be going through financial problems. So, is insolvency a kind of temporary financial condition?

The problem for companies is processing purchases with checks which has a lot of problems. I could for example give you a check when I do not have funds expecting that I sell your merchandise in a month and then pay you your money. Also company could give merchandise or take merchandise by same condition where nothing guarantee that I reach such number of sales and then amount in bank account after one month miss some funds that leads to bankruptcy.